Hot Markets to Watch & Trucking Costs Exposed | Ep 15

Caroline: [00:00:00] Welcome to This Week in Trucking, the podcast that tells you what you need to know about the trucking market for the week in 30 minutes or less. This week, we’re talking about diesel prices, freight market trends, and the operational costs of what it takes to run a trucking company. Plus, we’re going to be answering your comments and questions from the past videos. So hey, Gurvir, how’s it going? Where is your dad driving today? 

Gurvir: Doing pretty good. Yeah, he’s still out on the road. He went to Georgia. The South is really hot right now. So is the Tennessee market, South Carolina, Atlanta market is really hot for dry van. I think he got over $3 a mile coming back. So yeah, he just delivered that like yesterday. 

Caroline: 3 dollars a mile is not something you’re seeing so much in this market, right?

Gurvir: No, the South is turning hot. So that’s good. We’ll discuss, not in produce because of produce as well. There’s some, if you have vented dry van, you can haul some produce as well. But it is, Tennessee, Kentucky, Georgia, all those regions are getting good to go into right now.

Gurvir: There’s a produce season effect, yeah, for sure.

Caroline: [00:01:00] Sure. So diesel prices for the week, unfortunately, we are still creeping up a little bit in price week over week. We were receiving some down movement into June and now it’s creeping back up. Not a huge move though. The biggest increases in fuel prices came in the lower Atlantic and Midwest regions. But pretty much it’s up across the board except for the Central Atlantic region. So you’re in luck this week, Gurvir, being in Maryland, maybe prices are still holding steady in your state.

Caroline: The information that we get is from the U. S. Energy Information Agency.

Gurvir: Yeah. I think we see the lows of the lows this year. I don’t think we’re gonna see those again. And I think the prices went like really low, so I’d expect them to be a little bit higher, in the next coming months.

Caroline: They’re still down [00:02:00] from where we were last year, last summer, especially last spring was really a hot diesel market. And so we’re still pretty far down from that. So if you’re comparing last year’s rates to this year’s rates and last year’s prices to this year’s prices, it’s actually looking a little bit better this year. But Gurvir, what can you tell us about the freight market this week?

Gurvir: So if you look at the DAT load posts are up 3%. The truck posts are down minus 2 percent roughly, this week compared to last week. So that’s good. Dry van rates are still hovering around 2.05 flatbed is around 2.52 staying and reefer is up just by one cent.

That produce season is still in the works, and pretty much holding steady to seeing small improvements. If we look at Freightwaves’ national truckload index, it actually went up from 2.27 to 2.31. The National Truckload Index without fuel also went up about, by about five [00:03:00] cents.

So there’s some positive changes there. I love to look at Freightwaves because everything’s green. I think we’re going to show a screenshot here. That’s always a good sign. The main thing is also the broker margin is going down. So we went from a 61 cents to 59. That is actually a good sign.

So you want to see this number continue to compress. That’s a good sign for carriers that broker margins are going down. Essentially, the difference between contract and spot is going down. That’s actually a good sign. When the market does come back up, you’re going to see spot rates go up.

That’s when this whole thing is going to flip, right? The way we’re measuring these numbers. So overall, we’re staying steady, [some small] improvements. 

A couple of regions that are really hot – this is a new thing on the podcast where we’re going to share.

What are the hot markets in the U.S. right now that you should be going into? Currently the West Coast, right? Phoenix, San Diego, Tucson, Ontario California, Flagstaff. All those areas are really hot just because of produce season. But if you come to the southern region, Tennessee is really hot.

Georgia, Kentucky. Those are the [00:04:00] hottest states. Missouri is not doing bad either right now. Missouri is hot. You look at some parts of Northern Texas, Arkansas and North Carolina, South Carolina. So the South is pretty hot right now. So if you’re trying to haul freight, I’d suggest that you go into into South.

Duluth Minnesota is really hot right now. So if you’re trying to go into Minnesota that’s really hot. And South Bend, Indiana is also hot right now as well.

Caroline: Are you able to see by equipment type?

Gurvir: Yeah.

Caroline: This is all for dry van, right? Can you see anything for reefer or [flatbed]?

Gurvir: Yeah. It’s similar for reefer as well. But yeah, you can this tool allows us to check for reefer and flatbed as well, but, yeah, we can share those as well, but mostly all those should correlate.

Caroline: Yeah. And I’m curious to hear where listeners are driving and what kind of equipment they have. Because if we can get that information, so leave your comment below, of what kind of equipment you run [00:05:00] and where you’re based out of, because then we can tailor the information to the people who are listening.

Gurvir: Awesome. Yeah. And Florida, Miami area is completely dead. So yeah, don’t go to go, don’t go to Miami anymore. It’s really cold. There’s nothing coming out.

Caroline: So the ATRI, which is a big research institute that just came out with a new analysis of the costs of running a trucking company. This is something that they’ve been doing and tracking since 2014. So we almost have 10 years of data at this point, which is really interesting.

There’s a table that was sent, I think, by an Overdrive newsletter, just today, highlighting some of the costs and where those costs are going. So if you look at the table over time, fuel costs are not at an all-time high at all. Last year they peaked. But if we look back in 2014 we were looking [00:06:00] at an even [higher] fuel price, higher fuel price than we’re paying today.

Caroline: All of these are broken down into the different types of costs of running a trucking business. Is there anything on this table, Gurvir, that surprised you at all?

Gurvir: For me, nothing that surprises me actually, I think. And when I say surprised, like you hear about these conversations, I’ve been hearing about these conversations for eight to nine years. Hey, like for example, insurance costs are going up, 

I know that they went up from point seven, essentially seven cents in 2014 to now almost 10 cents, right?

Repairs make sense, right? Labor, everything is going up, parts, inflation, that’s affecting it. Fuel cost. I knew, right? Fuel cost hasn’t changed much, right? I think if we start drilling more, we’ll probably see fuel costs come down in 24 and 25. I think we’re about to be the biggest, oil producing country.

I think we’re going to produce more than Saudi Arabia. So truck trailer payments make sense. Trucks have gotten [00:07:00] really expensive. I was just talking to my dad the other day. He bought his truck for 85,000 in 2021. A brand new truck today is double that. So I knew about that.

Permits, right? Permits have gone down a little bit, right? Permits and licenses just by a few, like a half a cent or something. That is surprising. Tires have remained constant. That’s a surprise. 

Caroline: Would you expect tires to up with everything else?

Gurvir: I just think of everything will go up, right? Generally my thought is that why wouldn’t everything go up, but I can see why fuel and tires won’t.

Gurvir: Driver wages is another one, but that makes sense, right? That, it should go up. Yeah.

Caroline: That surprised me the most: 78 cents a mile?

Gurvir: I know a lot of companies that cannot afford 77 cents anymore and they’re bringing it down. That’s a hard conversation to have as a trucking company. How do you bring it down? I don’t see that it’s it’s 70 cents. That’s hard to believe.

Caroline: That’s really hard to believe. Even in 2023, even if you’re not talking about right now we’re talking 6 [00:08:00] to 18 months ago. Cast your mind back

Caroline: All the way back to 2023, but this is a really high number. I question the accuracy of this.

Gurvir: That’s why an owner-operator can really compete with the [big carriers] and the Landstars and the larger carriers. Because of their driver wage. It’s something that they can also take home. They can also live in the truck for longer, run it and actually go through the losses and just go through the recession.

They work on their own trucks rather than going into the repair shops every time. And that’s what more and more owner-operators, that are able to survive this. And now you’re seeing a lot of big companies. I think it was this company out of Texas that just went out, I think 500 trucks.

But that’s really surprising. That is something that, for the owner-operator, itgoes directly into the [their] pocket, that’s 77 cents. That’s why, in some areas, it doesn’t make sense to be an owner-operator. It’s better to be a company driver. Since if this number is true, you’re making 77 cents.

Caroline: Depends on how much experience you have though, right? Because if you’re new, green you probably shouldn’t be running your own trucking company if you’re just out of CDL school.

I do know that a lot of people go into business for themselves because carriers just aren’t paying these kinds of wages. I’m interested to know if anybody listening is a company driver. Does this track? Is this accurate? What do you think? And what have you seen? Or if you’ve been a company driver before, what have you seen? 

Gurvir: Yeah.

Caroline: or what are you paying?

Gurvir: It’s still lucrative. You look at it, out of 2 dollars and 27 cents. That’s what they’re saying, that it costs to run a truck. If you’re an owner-operator, you should be at least taking home 77 plus the driver benefits, you’re making about 95 cents, right?

Gurvir: So anything over 2.27 is what you’re pocketing as a business owner. And you should separate these two things, by the way, right? Hey, what is my driver wage as a company driver? And then what is a truck making, right? Because that takes investment as well, right? And that’s why you see a lot of people are able to survive this because they can just survive off of the driver wages and keep themselves alive, until the times get better. 

Caroline: And then they can take real advantage of higher rates.

Gurvir: Yeah. Wow. 1.70 to 2.27. What is that? Almost a 57 [00:10:00] cent increase in operational costs. 

Caroline: Over nine years.

Gurvir: That’s a lot. And the rates are still the same, I think. Wow. Yeah.

Caroline: I know, right? But if this is true, it’s good news for driver wages. I’m happy about that. Again, if it’s accurate,

Gurvir: Yeah.

Caroline: Happy about that, because I still think drivers are underpaid. I’m always going to think drivers are underpaid, but I think this is really good news that it’s moving in the right direction if this is accurate.

Gurvir: Yeah. I think it’s more probably closer to 70 cents, or at least it’s getting. Renegotiated. I think you were going to probably see those things, the driver raises come down.

Caroline: So we got a couple of interesting comments from our videos about electric vehicles and zero-emission vehicles. One in particular from Grazing Apprentice commented, it’s called a hybrid. You folks just like to talk about full-blown EV because it’s easier to dismiss, but hybrid fixes most of the issues that EVs have. So I’m curious, how much do you know about hybrid [00:11:00] trucks and hybrid technology?

Gurvir: Not much. But I would like to learn more though. 

Caroline: Lucky for you, I did some research on it because your nerd is always going to do that research. So there are a couple of hybrids on the market. I did not find any sleeper cabs on the market though. So I think for long haul, this is still not quite available, although I could be wrong because they may just be out there and not really searchable. But they might not be really beneficial for long haul either because the hybrid technology is recharging your battery when you’re braking.

If you’re on a highway for most of the time and you’re not braking a ton, you’re not recharging that battery. You’re not getting the benefit of being able to use the battery because it’s not going to recharge as much.

Whereas if you’re a local or maybe regional, then you’re braking more, you’re probably recharging that battery more and that’s probably more useful to you in those kinds of routes.

Gurvir: [00:12:00] Interesting. Okay.

Caroline: Yeah, there are add-on hybrid systems that you can put on your truck. Actually, one, I don’t know if they came out at the beginning of this year, but there was a really good article on them, Revoy that has a hybrid system that you can put on, and it’s a system that actually hooks on just like a regular trailer, and it goes between the cab and the trailer.

Caroline: there are also other ones, Tandem, Hyliion, so I found a couple of different options that they have for hybrid systems that you can attach to an internal combustion truck. But they are pretty expensive and they’re heavy. I saw some comments that were like, if you’re doing heavy haul, then it makes sense because this is not going to make that much of a difference if you’re already doing heavy loads. But if you’re not doing super heavy loads and you put something like this on your truck, it might cancel out some of the benefits of the fuel economy because you’re having to pull more weight.

Gurvir: Yeah. Hybrid makes more sense though. I think it’s more feasible given all the [00:13:00] restrictions with, total EVs.

Caroline: Maybe, I did see a comment where someone mentioned that one of the add-on hybrid systems that you can put on your truck costs 30,000 and adds 4 to 6 miles per gallon to your fuel economy. Take this with a grain of salt because this was all published two years ago and it wasn’t exactly a super reputable source, but I did the math on this. So best case scenario, let’s say it adds six miles per gallon to your fuel economy. That takes you from, let’s say an average of a class eight truck is about 6.5-7, right? Let’s say best case scenario, we’re being really optimistic here. It’s going to take you to 13.5 miles per gallon. If you drive 100, 000 miles in a year, by this week’s fuel price, it would save you about $26,000 in fuel in a year. So that sounds like a lot, but remember that you had to pay 30,000 for the system, [00:14:00] right? By the end of the year, you’re still in the hole for about 4, 000 plus any maintenance that you had to do on it.

The benefit of this is that I don’t really know how these things work, and I’d like to look into it, but it seems to me, just thinking about it, if it does break down, your whole truck hasn’t broken down. It’s just this add-on part that’s broken down. So maybe you can, unhook it or, take it off of your truck so that you can just keep going without having to totally break down, right?

So that is one benefit over an electric truck. But, what does it take to then pull that to somewhere where it can get maintenance, and how much does that maintenance cost, and how many people actually know how to service something like that, right? So a big unknown here, which is the maintenance cost of something like this.

Caroline: If it lasts five or, even 10 years, and that’s an awesome investment. Cause if you can save $25,000 a year on [00:15:00] fuel, that’s crazy good. 

Gurvir: 100%. Yeah.

Caroline: there’s still a lot of unknowns

And I think it’s going to be a lot harder for somebody with one truck or five trucks, even 10 or 20 trucks to justify investing in something like this when there are still so many unknowns. When you have a fleet of a thousand trucks, you can afford to test this out and see if it works, right?

You could just buy one of them, see if [it works]. And if it doesn’t, no big deal, but it’s harder for a small fleet to test this out.

[The comment was citing a particular brand, that makes that fuel mileage claim, but the cost of the equipment was unknown.]

Because they don’t put cost information out on there. 

Caroline: I’ve actually LinkedIn [00:16:00] with a couple of CEOs at these companies to see if we can get some answers from them. But I don’t know if they actually make them available to small fleets, right? Because I don’t know if it’s really worth it to them to sell to, or try to convince a smaller fleet to do this.

I’m guessing that they are trying to sell to the big fleets, right? The big brokers that have a carrier arm so that, they can actually make decent money and sell a bunch of these at once.

Gurvir: I did hear about one that ended up on Freightwaves. So that’s legitimate to add like a giant thing behind your truck. It looks like additional sleeper unit.

Caroline: Yeah, it’s the same.

Gurvir: I’m going to look into it. It’s it sits between the trailer and the cab. And it’s actually really interesting.

Gurvir: I’m looking at it right now. I don’t think they have pricing here. But but it’s interesting.

Caroline: It’s not like something you can just order.

Caroline: It seems like they’re selective and who can buy it, but who knows? So I reached out to, I actually reached out to the CEO of Revoy and let’s see if we can [00:17:00] get him on the pod to ask him.

Gurvir: I’m looking at their site right now. They’re actually leasing it to you. They just charge you a fee

Gurvir: Yeah, so if you’re an owner-operator, you’re gonna have to like electric trucks. This is going to cost a lot, right? And they’re like, conventionally, you have 68 miles [of] electric range.

They’ll give you 250 miles. And the upfront cost is zero and the risk is zero, but you just pay them a fee, like a monthly fee to, to lease out that unit. 

Caroline: That’s a cool model.

Gurvir: Yeah. So it’d be interesting. Somebody should get it, and try it out.

Caroline: Could you convince your dad to get something like that?

Gurvir: I don’t know. Truckers are like, they stick with the status quo.

Let’s see. He’d be like, yeah, you already tried this whole Tesla electric thing. Yeah. And, just leave my truck alone. I think that’s going to be his response.

He’s like, stop making me a guinea pig for everything.

Caroline: We had another comment about electric trucks. That said, “no way would I want to sleep in an electric truck. That is what long haul drivers have to do. Also, electric trucks wouldn’t work well in the winter up [00:18:00] north. I don’t think I need to explain why.” So this was responding to a video where we were questioning whether or not electric trucks were viable for the long haul.

We didn’t talk about the experience that drivers have in the vehicles. Now, Brian from CALSTART said that pretty much every driver that he’s talked to that’s hopped in a electric truck has really loved the experience and loves the experience of driving those things ’cause they’re so smooth. But they don’t have any sleeper, cabs right now that I’m aware of. I’m wondering, are people worried that it would be unsafe to sleep in an electric truck? I guess I don’t really know where that comment comes from.

Gurvir: I’m not sure. Maybe safety over the batteries. You’ve seen some Teslas that have, weird things have happened to Teslas. So yeah I, I’m sure if there’s like a small chance that really, It can be a challenge for people to get comfortable with it. So I’m sure there could be something there.

I don’t know enough about it, but you sometimes hear about Tesla’s like just like blowing up or, catching fire or [something] like, maybe that could be the reason why someone may not feel comfortable,

Caroline: I don’t know. Aren’t diesel trucks. Like also full of flammable liquid?

Gurvir: Yeah, you’re literally sleeping above a fuel tank right now.

Caroline: Yeah I don’t know. I guess I don’t buy it. I don’t see how electric trucks would be more dangerous, but I don’t know. I don’t, I actually don’t know the physics of it. So if you want it, whoever left that comment, if you want to explain more would love to understand that a little bit more. I do know, the point about weather is a really good one. A lot of electric trucks are being tested in places like California and Texas, which is good because there’s a lot of trucking in California and Texas, right? But I do wonder how they perform in really cold conditions. That’s one of the reason why I probably wouldn’t buy an electric car anytime soon.

Not only are they pretty cost prohibitive, but I also worry about driving in the country on roads in the winter. I’m in Michigan. 

Gurvir: And this Revoy hybrid thing also weighs about 14, 000 pounds, so you, you can’t the maximum payload that you can take is [00:20:00] probably, I don’t know, 35, 000, 30, 000 or something, depending, yeah, depending on other things. But yeah, I think we’ll get there though. I think with innovation and everybody, innovating and technology getting better I think we’ll definitely get there.

But this is a cool, I like this concept better than fully electric for sure.

Caroline: Yeah, I just think it gets us part of the way there, and that’s better. I know there’s a lot of environmental issues around biofuels and land use. There are people who think biofuels are so much better than regular fossil fuels – maybe in some ways they are environmentally better, but in other ways, they’re going to take up a ton of land to grow all that corn and soybeans.

So there are a lot of considerations. You have to weigh the impacts of it.

And anything that gets us closer to something better, healthier for drivers, smoother, safer is better. Better is better.

Gurvir: yeah, no totally. Yeah, I still don’t know where you would charge these things, but 

Caroline: I think it’s probably mainly for bigger shippers and carriers, right? Because [00:21:00] they’re going to have places, they can build out that infrastructure for themselves.

Gurvir: yeah, totally.

Caroline: We had another comment from our episode about truck parking. So that was a couple weeks ago. Lynn Jr. commented, “I could not agree more. Most people have no idea in the United States how much they rely on truck drivers for their daily lives. Literally everything gets delivered by truck drivers.”

This is so true. And this is something that I didn’t fully appreciate until I started working for Bobtail a couple years ago, just how dependent I am personally on stuff that gets delivered by trucks, and literally everybody in this country is. And again, I said it before, I don’t, my eyes, truck drivers will never get paid enough, and truck drivers will never get enough credit.

Gurvir: Yeah, and also yesterday, there was a new legislation that included $200 million for truck parking. So that’s a good thing. I don’t know if the 200 million is enough, but at least it’s something that gets started. And I think there should be more free parking than paid parking, right?

The government should be doing more with rest areas and [00:22:00] all those things, to be providing more free parking.

$20 a day, $30 a day for parking? That eats a lot of the margin away, right? That’s free dinner and free lunch for truck drivers. And that’s now being spent for just parking your truck somewhere. So definitely or maybe it’s a combination of both. And that’s something we discussed a few episodes

Caroline: Private and public together. Again more parking would be better. And whether it comes from a private source or a public source is maybe better for the driver in the short term because they don’t have to pay for it, but maybe a private investment can be a little more sustainable and you’re going to have that truck parking for a longer period of time,

Maybe paid parking is better, but it can’t be that high. Then it’s just not feasible.

Gurvir: 100%. Makes total sense. Yeah.

Caroline: Awesome. All right, Gurvir, that’s what I have for this week in trucking today. I hope everyone is safe and secure for the next week’s holiday, and we will see you in a couple weeks.

Gurvir: Awesome. Thank you. [00:23:00] Everyone, drive safe.